Proxy Access Delayed

The SEC announced on October 4 that the previously announced implementation of proxy access (SEC Rule 14a-11) that was slated for November 2010 will likely be delayed until at least the 2012 proxy season. This will allow for further review on the part of the SEC and more advance planning and action on the part of public filers.

The change is due in large part to an legal challenge filed on September 29 on the part of the Business Roundtable and U.S. Chamber of Commerce Center for Capital Markets Competitiveness filed with the U.S. Court of Appeals for the D.C. Circuit. This delay does not necessarily mean that proxy access will or will not go through, but it does call for more consideration before a potentially hasty decision is made. The two organizations argue that the rule “imposes unjustified costs, empowering special interest shareholders and disrupting fragile economic recovery.” Conversely, organizations such as the Council of Institutional Investors continue to counter that the change is critical to effective corporate governance and shareholder rights.

It was going to be a rush for filers to prepare for proxy access adequately with the rule being published in the Federal Register so close to the upcoming proxy season, but it would appear that the debate is far from over. Parties on both sides of the fence hope for a speedy resolution of the issue but with say on pay looming on the horizon for the 2011 proxy season I am not sure that any filers are going to be disappointed to have a little extra time to figure out proxy access.